Business Year-End Checklist
As the year is coming to a close, there will be a few business housekeeping items that you'll want to shore up before year-end. This article will cover some of the things that you should perform to close out the year.
Year-End Tax Planning
If you haven't already reached out to your accountant to connect on any last-minute planning, you should do so before the year closes. Once the year is over there ability to plan for taxes becomes limited.
Reach out to Vendors to Obtain Form W-9
In anticipation of the 1099 forms that will need to be filed at the end of January (form 1099-NEC) and end of February (form 1099-Misc) next year, it is a best practice to review your list of vendors that may require a form 1099, and double-check that you have a completed form W-9 filled out and signed by the vendor. Once the year is over, it can be challenging to scramble to collect the necessary forms W-9, so the earlier you can obtain the W-9, the better. Ideally, you should receive a completed form W-9 while onboarding a new vendor.
Update Your Company's Books
If your company's books aren't updated regularly throughout the year, you will want to make sure to get your accounting updated as much as possible before year-end. Without updated accounting, it is challenging to prepare for and plan for taxes. Updating the books before year-end will also make it easier to timely file your tax returns since there won't be as much work involved at tax time. You would want to ensure that all bank and credit cards have been reconciled in your accounting software until October/November. Also, make sure to summarize any business expenses you paid with personal funds so the expenses can be captured and deducted.
Get Together Information for Tax Returns
You'll also want to start gathering the documents your accountant will request to prepare your tax returns. Such documents would include copies of invoices from fixed asset purchases (i.e., purchases of equipment, furniture, leasehold improvements). Also, locate and provide any correspondence received from a tax authority that you have not previously sent to your accountant. Also, put together a summary of the business miles driven throughout the year and be sure to claim the related deduction.
Year-End Payroll Processing
Make sure to contact your payroll service provider to see if any additional information is needed to complete the year-end processing of your company's payroll. There could be specific reporting requirements for certain w-2 employees, which would need to be provided to the payroll company. Most likely, you will receive a reminder email from your payroll service provider requesting the information they will need to complete your company's payroll processing for the year.
Review Current Year's Results
If you haven't tracked your company's financial progress throughout the year and compared it to the goals you had established, then it would still be worthwhile to review the results before year-end.
Start Planning for Next Year
As the year comes to an end, you'll want to start planning for the following year. As mentioned above, you should review the current year's results against the goals you set last year and then set goals for next year. I'd recommend you also start working on your company's initial budget for next year.
Taking care of the above items will help your company finish the year strong and set up for success in the new year.